In general, a business is defined as any company or organized entity duly registered under the law to carry out commercial, manufacturing, or other activities aimed to earn a profit. Companies may be either for-profit or non-profit entities that conduct primarily to meet a social objective or further a noble social cause. Some businesses are classified as partnerships or corporations. In other words, a business is either directly involved in commercial activity or indirectly through its activities.

A partnership is a legal entity composed of two or more people who come together with a common business or political purpose. Partnerships may be general, limited liability, joint venture, or a limited liability partnership. Limited liability partnerships (LLPs) are similar to corporations. They share in the liability of their partner but have the option to create their own assets and gain profits without being personally liable for debts of the partner. They usually do not have voting rights but are still able to manage and use the assets of the partnership.

Unlike partnerships, corporations have shareholders who directly own the shares or stocks of the entity. Shareholders can direct the actions of the corporation through their voting rights. They do not, however, have the same voting rights as the owners of the corporation.

A corporation is generally classified into two classes: limited liability companies or corporations and public limited liability companies or partnerships. Public limited liability companies are allowed to issue shares of stock for a limited period of time and have the same tax benefits as private companies. Limited liability companies are allowed to trade publicly while remaining restricted in what they can and cannot do. Both of these types of businesses can form corporations.

Not all businesses are publicly traded businesses. The most well known examples of these are restaurants, but there are many other types of small businesses that may be unquoted. In general, the more unique or specialised a service or product is the more difficult it will be for a company to get trading room in the stock markets.

Hopefully this has been informative in showing you just some of the key differences between partnerships and corporations. As we continue to learn about the world of commercial law we will no doubt see many more examples of these fundamental differences. To wrap up this article, we would like to highlight an important term: strategic management.